exv10w5

EXHIBIT 10.5

SECOND AMENDMENT AND WAIVER
TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(Non-Guaranteed Line)

This Second Amendment and Waiver to Amended and Restated Loan and Security Agreement is entered into as of February 28, 2008 (the “Amendment”), by and between COMERICA BANK (“Bank”), ALLIANCE CONSULTING GROUP ASSOCIATES, INC. (“Consulting”) and ALLIANCE HOLDINGS, INC., (“Holdings”; Consulting and Holdings are referred to herein individually as a “Borrower” and collectively, the “Borrowers”).

RECITALS

Borrowers and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of February 28 , 2007, as amended by that certain First Amendment and Waiver to Amended and Restated Loan and Security Agreement dated as of May 2, 2007, and as amended by those certain Waivers to Amended and Restated Loan and Security Agreement dated as of August 1, 2007 and October 31, 2007 (collectively, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.

NOW, THEREFORE, the parties agree as follows:

1. The following defined terms are amended to read as follows:

“Borrowing Base” means an amount equal to the sum of (i) eighty percent (80%) of Eligible Accounts plus (ii) the lesser of eighty percent (80%) of Eligible Unbilled Accounts or Two Million Dollars ($2,000,000), in each case as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrowers.

“Eligible Unbilled Accounts” means Accounts that would otherwise be Eligible Accounts but have not yet been billed, except for Unbilled Accounts arising from fixed fee contracts with milestone-based payments where the deliverable milestone has not been achieved. An Unbilled Account shall be ineligible if not billed by a Borrower within 30 days.

“Letter of Credit Sublimit” means a sublimit for Letters of Credit under the Revolving Line of $500,000.

“Revolving Line” means a credit extension of up to Nine Million Five Hundred Thousand Dollars ($9,500,000).

“Revolving Maturity Date” means February 25, 2009.

2. The following defined terms are added to the Agreement to read as follows:

“Consolidated Net Income (or Deficit)” means the consolidated net income (or deficit) of any Person and its Subsidiaries, after deduction of all expenses, taxes, and other proper charges, determined in accordance with GAAP, after eliminating therefrom all extraordinary nonrecurring items of income.

“Consolidated Total Interest Expense” means with respect to any Person for any period, the aggregate amount of interest required to be paid or accrued by a Person and its Subsidiaries during such period on all Indebtedness of such Person and its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in respect of any capitalized lease or any synthetic lease, and including commitment fees, agency fees, facility fees, balance deficiency fees and similar fees or expenses in connection with the borrowing of money.

“EBITDA” means with respect to any fiscal period an amount equal to the sum of (a) Consolidated Net Income of the Borrowers and their Subsidiaries for such fiscal period, plus (b) in each case to the extent deducted in the calculation of the Borrowers’ Consolidated Net Income and without duplication, (i) depreciation and amortization for such period, plus (ii) income tax expense for such period, plus (iii) Consolidated Total Interest Expense paid or accrued during such period, plus (iv) non-cash expense associated with granting stock options, and minus, to the extent added in computing Consolidated Net Income, and without duplication, all extraordinary and non-recurring revenue and gains (including income tax benefits) for such period, all as determined in accordance with GAAP.

3. Section 2.3(a) is amended to read as follows:

(a) Interest Rates. Except as set forth in Section 2.3(b), the Advances shall bear interest, on the outstanding daily balance thereof, at a variable rate equal to one and one-quarter percent (1.25%) above the Prime Rate; provided, however, that if Borrowers are in compliance with this Agreement and maintain at least ninety-five percent (95%) of projected EBITDA as outlined in the Borrowers’ board-approved plan provided to Bank for the first six (6) months of fiscal year 2008, then Advances shall bear interest, on the outstanding daily balance thereof, at a variable rate equal to three-quarters of one percent (0.75%) above the Prime Rate.

4. Section 2.5(d) is added to the Agreement to read as follows:

(d) Unused Line Fee. A per annum fee equal to 0.25% of the difference between (1) the amount of the Revolving Line available on each date of determination, and (2) the average daily balance owing on account of the Revolving Line during the term hereof, paid quarterly in arrears, which shall be nonrefundable.

5. Section 6.8 of the Agreement is amended and restated in its entirety to read as follows:

6.8 EBITDA. An EBITDA, on a trailing three (3) month basis, as indicated for the months set forth below;


Date of Measurement	EBITDA
Three Months ended 03/31/08	$	(560,000	)
Three Months ended 04/30/08	$	(60,000	)
Three Months ended 05/31/08	$	145,000
Three Months ended 06/30/08	$	265,000
Three Months ended 07/31/08	$	350,000
Three Months ended 08/31/08	$	465,000
Three Months ended 09/30/08	$	715,000
Three Months ended 10/31/08	$	825,000
Three Months ended 11/30/08	$	900,000
Three Months ended 12/31/08	$	735,000

Thereafter to be determined by Bank based on Borrowers’ Fiscal Year 2009 Plan.

6. Section 6.9 of the Agreement is amended and restated in its entirety to read as follows:

6.9 Minimum Cash/Excess Billed Eligible Accounts. Borrowers shall maintain at all times, on a consolidated basis, measured on Friday of each week, a balance of Cash at Bank and Cash at

Bank’s Affiliates covered by a control agreement plus excess billed Eligible Accounts of not less than $1,500,000.

7. Bank waives Borrower’s failure to comply with Sections 6.8 (Profitability) and 6.9 (Current Ratio) of the Agreement for the months ended October 31, 2007; November 30, 2007; December 31, 2007; and January 31, 2008.

8. The Borrowing Base Certificate is amended to be in substantially the form of attached Exhibit C.

9. The Compliance Certificate is revised to be in substantially the form of attached Exhibit D.

10. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remains in full force and effect in accordance with its terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of all instruments, documents and agreements entered into in connection with the Agreement.

11. Except as set forth in the Schedule of Exceptions originally provided by Borrowers to Bank in connection with the Agreement and any updated Schedule of Exceptions provided by Borrowers to Bank, each Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing.

12. Borrowers are parties to certain documents, instruments and/or agreements (collectively, the “Documents”) with or between the undersigned and Comerica Bank, a Michigan banking corporation (the “Merged Bank”). The Merged Bank has merged with and into Comerica Bank, a Texas banking association (the “Surviving Bank”). Borrowers hereby acknowledge and agree that any reference in the Documents to Comerica Bank shall mean Comerica Bank, a Texas banking association, as successor by merger to the Merged Bank.

13. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

14. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

(a) this Amendment, duly executed by Borrowers;

(b) a renewal fee equal to $35,000 plus an amount equal to all Bank Expenses incurred through the date of this Amendment;

(d) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

[SIGNATURE PAGE FOLLOWS.]

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.


	ALLIANCE HOLDINGS, INC.
	By:	/s/ James Short
	Title:	Signer



	ALLIANCE CONSULTING GROUP ASSOCIATES, INC.
	By:	/s/ James Short
	Title:	Vice President, Finance



	COMERICA BANK
	By:	/s/ Peter Bendoris
	Title:	Vice President